Eric's Blogs

Why TOC for Projects is more difficult and what to do about it

This book is about applying TOC to project management. After reading this book I understood why TOC for project management is not as straight forward as it might first appear. Not only are projects not repeatable like production assembly lines buts in a multi-project environment you need to take shared resources into account. This is even more difficult when the managers for each project are different people. Lessons learned are:

• Estimates should be “In X days with 50% chance of completion”
• Cut estimates in 2 or 3 if suspect that tasks have padding
• All the padding should go for the project but less than sum of padding
• Add time buffers (at no cost) when paths merge with critical path
• If a resource is shared between projects then it may be a bottleneck
• Resource bottlenecks should be treated as such: identify, exploit, subordinate, elevate...
• No due dates (at least not until the work begins) so as not to encourage the “student syndrome”
• Prioritize according to amount of remaining buffer when conflict occurs

Of all the business novels by Eli Goldratt, I think that this is the one that I have learned the most from. As with all his novels, it’s easy and fun to read with the added benefit that you will have learnt to better manage your projects. A must.

High-Tech perspective on TOC and Software.

This is the story of a high-tech company that sells ERP systems and how it decided to move from selling a bunch of features to selling bottom-line value and in the process has increased it’s business considerably. In parallel, their main product is also moving in lock step from a pure ERP to a TOC based management system. As with all of Goldratt’s business novels, the main characters have their “ah ha” moment.

I could relate to it because I’m a techie guy too and I’m used to being sold “features” and “benchmarks” as opposed to value. As an end user the bottom-line is often emotion, status or recognition, which in the high-tech world is often not well addressed (Apple being a notable exception by selling “features” and “bottom-line”). It’s an easy read and actually quite fun.

Authoritative book about Goldratt's thinking process.

This is an excellent book for learning about the thinking process of TOC. You get the basic symbols, an elegant way to present your drawings on multi-page layouts. More important, you learn how each piece of the thinking process fits into the larger picture. The following topics are covered in detail:

• Categories of legitimate reservation (CLR)
• Current reality tree (CRT)
• Conflict resolution diagram (CRD)
• Future reality tree (FRT)
• Prerequisite tree
• Transition tree
• Group dynamics of TOC.

What I have found most valuable in this book is that it teaches you how to use each technique and how they interact with each other. For example, I didn't know that there were may ways to start building a conflict resolution diagram but the author describes three: right-to-left, left-right-center and clockwise rotation. Each of the approaches has specific strengths. Finally, the last chapter on group dynamics is especially important when applying toc in a group context. I have surely read this book a little too fast and will probably go back to it in a little while.

For anyone interested in TOC this book is, in my opinion, a "must have" companion.

Structured, focused but light and self-promotional

Except for Throughput Accounting: A Guide to Constraint Management, this is the first TOC related book that I've read and that's not in the form of a novel. It's very well structured and easy to follow and offers a birds eye view of the necessary of what needs to be done to bring your business to the next level.

The book starts by introducing the T (Throughput), I (Investment) and OE (Operating Expense) framework for decision making. It doesn't go into any detail but gives references to appropriate works. I liked the way this topic was presented in "Throughput Accounting". Then a system plainly called the "Five Focusing Steps" is used to leverage TOC in all aspects of a manufacturing business. Finally, the most interesting chapters (to me) are at the end and discuss resistance to change and show how the TOC Thinking Process should be used to obtain buy-in from upper management.

I'm a bit critical of the authors position when it comes to project management as it could apply to IT. I do agree that IT projects that support the global constraint should have a higher priority than all other projects but where I don't agree is in the use of the critical chain for the project management activities. It might work well in some areas but in software projects the requirements are never sufficiently well expressed or change too quickly for this type of approach to work successfully. A much better way to manage projects would be to use Scrum, which is better suited to the software world and is also concerned with project velocity.

Though its sold as a "executive overview" book, I still think that it's a bit too light. It lacks depth on all topics. I also find it somewhat too self-promotional.

Makes accounting seem so simple!

I no accountant yet Steven Bragg leads me to believe that throughput accounting is much easier to grasp than GAAP accounting. It also seems so more "natural" than activity based costing; for example. There are many differences between throughput accounting and "regular" accounting and here you get to read "what" and "why" and more importantly "how" to reconcile the both as GAAP accounting won't disappear.

There is a section on financial analysis where we are taken through a series of decisions to evaluate and how throughput accounting models can help us solve them. It's quite simple and most questions are answered using the same basic tool. Budgeting and control also have sections of their own.

My favorite part of the book after financial analysis was performance measurement. The author discusses twenty indicators with their strengths and weaknesses. While no single indicator alone "says it all," combined they could make a wonderful dashboard(s).

Though not as light as other book on TOC, this one is nevertheless a must.

Good and Full of New Material

This book truly is a sequal to the goal. In the goal we were introduced the important topic of throughput, inventory and operational expenses. On throuput we learnt how "work" flows through a process, how to manage buffers and when to introduce work into the system. We see how inventory is just held-up cash and why we should try to minimize it within the limits of our constraints. Finally, on operational expenses, we see how cost accounting can really distort the reality and that having excess capacity can actually be a good thing.

In this book the author doesn't just repeat the process at a higher level. Instead we are introduced to new material: the Thinking Process. This is a toolkit for problem solving tools, which make us question our assumptions. These tools are named “Current & Future Reality Trees”, “Pre-requisite Tree”, “Transition-Tree” and “Negative Branch Reservations”. As the story unfolds, our hero is busy applying the Thinking Process in sales in order to generate a leap in profits.

At times, I found the book to be a bit “verbose” in the sense that reading a series of almost repeating if-then statements can be somewhat tedious. But there are some small diagrams that help you follow. All in all, I liked the book but it’s an introduction not a manual. Neither this book nor the previous is much more than an introduction to the topic.

For a more in-depth look at the Theory of Constraints and to gain sufficient knowledge to apply it to a business, you would definitely need another book.

4 Stars: Great but not a thriller (as advertized)

Thare are many other good reviews on this book what else could I add? Well I've read this one just a few days and really liked it but let's face it: it's not a thriller nor is it really a novel. It's just way too linear for that. But don't get me wrong. This is an excellent book but the style fall short of what I would expect from a novel. Nevertheless, it's still a 4 star book because the objective is not so much to be the next "Dan Brown" but to use the narrative as a teaching aid and to this effect it succedes really well.

Perhaps the only thing is that in a real scenario, I suspect that Alex, the main character, would have faced far more resistance especially when you are trying to change an industry norm. This is an endevor equivalent to saying "Everyone else is blind or dumb but listen to me I know what I'm doing". Unless you actually own the business or you can convince the owner, it's probably near impossible to do. Here a "cas de force majeure" gave our hero the necessary leway.

A good and easy read.